Transcript

[00:00:00] Virginia Li:  Welcome to BioCentury this Week, I'm Virginia Li, BioCentury Associate Editor, and I'm joined by 

[00:00:13] Simone Fishburn: Simone Fishburn, Editor in Chief 

[00:00:15] Lauren Martz: Lauren Martz, I head Translation and Clinical Development coverage.

[00:00:19] Stephen Hansen: Stephen Hansen, Associate Editor. 

[00:00:21] Virginia Li: Today Lauren will get us up to speed on the CRISPR landscape following last week Nobel Prize awards in Chemistry to CRISPR pioneers: Jennifer Doudna, and Emmanuelle Charpentier. Stephen will talk IPOs following what's been a very busy year for new biotech listings.

[00:00:35] First in the world of COVID, FDA last week finally posted its guidance on the Emergency Use Authorization (EUA) of COVID-19 vaccines, which they said two months of safety data will be required before authorization. The announcement comes as industry leaders and FDA Commissioner Stephen Hahn have continued to assert FDA's independence and push back against the pressure from the White House to authorize or approve the vaccine prematurely. The agency also announced last week that it will no longer review EUA requests for laboratory-developed tests to diagnose COVID-19, raising concerns about the test accuracy and liability protections for test developers.

[00:01:12] As for therapeutics, Eli Lilly and Regeneron, both requested EUA's for their COVID-19 mAbs shortly after President Donald Trump released a video calling for immediate authorization of both therapies and asserted that they would be available free of charge. Operation Warp Speed (OWS) has said that they expect to have access to over a million doses from both Regeneron and Lilly by year end.

[00:01:34] Last week, Doudna and Charpentier Won the Chemistry Nobel eight years after their joint discovery that the CRISPR/Cas9 system can be harnessed for gene editing applications. They are now founders, scientific advisory board members, or directors of at least 14 CRISPR therapeutics and diagnostics companies.

[00:01:51] Lauren, can you tell us about what some of these companies are working on? 

[00:01:54] Lauren Martz: Sure, when this technology was first developed we saw a few companies come out that were working on the first generation of the CRISPR technology. So these are using the standard CRISPR/Cas9 to usually disrupt genes that are mutated and that you no longer want in certain diseases. But we're starting to see them come out with a next-generation of companies, even though we haven't actually seen any real clinical proof of concept for that first-generation. 

[00:02:20] The last week is a great example, it was a big week for Doudna and we saw a company that she co-founded called Scribe just announce they're working on a technology to discover entirely new CRISPR/Cas enzymes. So their starting point for the first enzyme that they've discovered was also uncovered in Doudna's lab - that was something called CasX or Cas12E, and then they use that to optimize the properties and make it completely different than the original enzyme. And that's just one example, there are a lot of different technologies that use the basic CRISPR structure to do different functions. 

[00:02:57] Simone Fishburn: Lauren help us out here, obviously this Nobel Prize reflects what CRISPR has already done for research. I think many biology labs across the world are using CRISPR as a tool to engineer cells, or create animal models, or whatever... I think you said that the Nobel Committee acknowledged its therapeutic potential but that's still a long way off, right. Now I think my question is this, the first generation that Doudna, Charpentier, and Zhang at the Broad, invented was able to do a certain number of things. What are the particular gaps that came up with that technology that these follow-on ones are trying to address? 

[00:03:36] Lauren Martz: Sure, so that technology is really good as I said at knocking out or disrupting a gene, it's proven to be a lot more difficult to actually correct a gene. 

[00:03:46] Simone Fishburn: Why is that more difficult? 

[00:03:47] Lauren Martz: So the way that CRISPR works is it just basically makes a cut at a certain site in the genome, and then the cells' natural DNA repair mechanisms go in and fix that. And what's more commonly used in most cell types is a repair mechanism that just inserts any random genetic sequence into that spot. So the effect is usually that random sequence then destroys the sequence of the gene that you'd need to actually create a protein. In order to insert one, you'd actually need a different mechanism that's not commonly used that can copy a template into that sequence, and it's just the efficiency of doing that is very low if you're using the standard CRISPR/Cas9. That's just one example, there've been a lot of concerns over off-target mutations and the potential there, and it's still not exactly clear if that's a problem or how common those are. And the other issue is the standard CRISPR/Cas9 is just really tied up in an IP dispute. So if you can avoid using that standard system you avoid some of the IP mess. 

[00:04:47] Stephen Hansen: So are some of the new sort of next generation enzymes are they better suited then for more than insertion approach?

[00:04:55] Lauren Martz: I don't know that any of the actual enzymes that have been identified are better, but there are different delivery mechanisms that companies are using. There was a company founded by Matthew Porteus, it was launched a few weeks ago called Graphite that's using a different delivery mechanism to try to actually make that work better.

[00:05:11] And then there are systems that use a dead version of Cas9. They hijack the targeting mechanism that comes with CRISPR and attach that to a different functional domain to have a different effect. So companies like Beam Therapeutics are using the sequence targeting component of the CRISPR system and attaching it to a different enzyme that can then make point changes, changes in nucleotide.

[00:05:33] Simone Fishburn: Lauren, you actually wrote in your story last week that there's been 15 new companies formed since 2015, that calculates to about three a year. I think one of the things I wanted to ask that you've also been looking at is how many of these companies actually have the fingerprint of the founders, Jennifer Doudna, Charpentier, or Zhang from the Broad... How much is it these original innovators are still extending their own technology? 

[00:06:00] Lauren Martz: I think it's about half of those companies have one of these three pioneers as a cofounder, or a member of the scientific advisory board (SAB), and these aren't all therapeutics companies, several of them are working on diagnostics as well. But these pioneering researchers are definitely looking into ways to expand their reach into new enzymes, and new technologies that build on the foundational CRISPR technology. 

[00:06:24] Stephen Hansen: That was just one of the things that I was curious about is how reliant these companies are? Obviously I think as you said, there's new discoveries come out of these labs, you can build new IP there. Even companies that are founded now, how reliant they might be on that foundational IP going forward? 

[00:06:39] Lauren Martz: I don't think anyone knows the answer to that for sure. I mean certainly anyone that's working with CRISPR/Cas9 is going to probably run into some sort of an IP issue. It's not clear what licenses you need to have at this point but something will be needed. I think the most obvious way companies are saying to get around that is to use different enzymes, and even so they're still using the same general CRISPR principles. So it's going to be interesting to see how the IP landscape sorts out once these get closer to the market, which is still a ways off. 

[00:07:09] Simone Fishburn: First of all, I would say this might segue to the next section. But it's certainly a field that investors just keep being willing to put money into. And I think that's both on the public and the private side. 

[00:07:20] Lauren Martz: That's right. Yep. 

[00:07:21] Virginia Li: So switching gears here a bit. Stephen, it's been a very active year for biotech IPOs. So what sort of trends are you seeing with these new listings? 

[00:07:31] Stephen Hansen: Yeah, I think the most interesting thing I've seen lately is just the incredible amount of money that each of these companies are able to raise. For instance, the one thing we picked out last week was this trend we're seeing. And five years ago I think you would have been dumbfounded to hear this but $200 million raises right now are a dime a dozen really. So basically what we saw was there's actually been 42 now, 42 companies that have raised over $200 million in an IPO, and that is well above the combined of what we've seen over the past five years, it's pretty remarkable. One sort of blinking back to what we were saying about CRISPR, 12 of these companies were preclinical companies able to raise more than $200 million on the IPO market. So it's been, like everything else in 2020, it's been pretty much an outlier year for the IPO market. 

[00:08:16] Virginia Li: What do you think is driving the larger listings, is it mostly investor interest and just the amount of funding available -- or do these companies actually need that amount of funding to develop their platforms?

[00:08:28] Stephen Hansen: I think it's like anything in biotech, right? If the money is there, you take it. So they are definitely looking to raise the money if they can. But there's also just an incredible amount of supply out there. And I think it's also a situation where the IPOs have developed into their own asset class of sorts, where you have some investors that are, you know, they won't even bother to read the S1 - They just see if it's a biotech IPO they will buy it, and then with the idea that it will get a bump then you just make money basically by flipping IPOs. And I think there is something sort of a virtuous cycle that goes on in this sort of a market as well.

[00:09:00] Simone Fishburn: Stephen how much of these listings are NASDAQ versus, the Chinese exchanges or Hong Kong exchange? 

[00:09:06] Stephen Hansen: It's still mostly NASDAQ. So out of those 42, there were nine that were done in China or Hong Kong roughly about 20% are in China. Which obviously is a lot more, we had seen none as of a couple of years ago. So still have the majority on NASDAQ. But what's also interesting is that these major IPOs are making up the vast majority of the money that's being raised on IPO is to begin with. It accounts for about 75% of all of the money that's been raised in IPO this year. It's a lot of money pouring into a relatively small number of new companies that are listing. 

[00:09:38] Simone Fishburn: One of the things we've been talking about the last few weeks Stephen is the idea that there's going to be uncertainty after the election and people are trying to get done what they can now. Do you think that's part of this -- lets assume that next year there will be a stable government, wouldn't that be nice... Do you expect 2021 still to be able to be minting money, you know companies big enough to mint money in this way? Or is there a sense that this is a 2020 -- and this I don't know if we're going to call it a bubble --but this thing might go down? 

[00:10:09] Stephen Hansen: Whenever things are moving at a record pace it's hard to just say, Oh yeah it's just going to continue in the next year. From what I've heard from investors, and some of the bankers it's not going to drop off, by any means. It's hard to foresee this sort of pace coming. I mean the IPO is have raised billions of dollars more than the previous record years. To see something more like we had in 2018, and 2019 I think would be perfectly reasonable for next year. Those were record years in and of themselves at the time, it's just 2020 has been such an outlier it's hard to think that this pace can be sustained. 

[00:10:41] Simone Fishburn: I think one of the things that you'd written about earlier was generalists didn't have that many other places to go? 

[00:10:47] Stephen Hansen: Right, that's true. That was one of the reasons that people were suspecting they were pouring in over the summer, is that there wasn't really anywhere else for them to put their money. As we get towards a vaccine potentially approved, and we start getting more data on these therapeutics. If that does allow us to start talking about opening up the economy a bit more, there's this perception that investors then can start putting their money back into services, and back into other areas that have maybe seen a lot more disruption because of the pandemic. And if that's the case you could start seeing a rotation out, which it's hard to say if that would directly impact IPOs or not, given again how I said they trade as their own asset class. But it's possible that some of that supply goes elsewhere. 

[00:11:26] Simone Fishburn: Just going to tease something for the China Summit. Lauren has been looking at the financing for Chinese companies, we'll be doing this for U.S. companies as well, really looking terms of the innovation value of these companies and where the money's going by therapy, and by hot topic. So that's a subject that I'm going to tease now that will be coming up in future articles in BioCentury, as well as podcasts. 

[00:11:51] Virginia Li: Thanks everyone, that's all we have time for. Registration is now open for our 7th BioCentury-BayHelix China Healthcare Summit. This digital event runs from November 9th to the 13th and includes strategic panels, one-on-one virtual meetings, company presentations, and two conference reports from our partner McKinsey. Register today and get immediate access to a pre-event program including BioCentury Business Intelligence on China Biotech. All of the podcasts are available at our website, Spotify, Stitcher, Apple, and Google. 

[00:12:19] Music for all of our podcasts is provided by Kendall Square Orchestra, which connects science and technology professionals and other members of the greater Boston community to collaborate, innovate, and inspire through music while supporting causes related to healthcare and education.